Milunovich said the company's narrowed focus is paying off so far. "HPE's stock has outperformed since the split a year ago due to (1) inexpensive valuation, (2) earnings beats in F1H/16, and (3) announced divestitures of Enterprise Services and Software," the analyst notes. "Today only valuation remains with a P/E of 8x ex-cash and an EV/EBITDA of about 4x. We do have concerns regarding HPE's private cloud focus. We recently considered additional catalysts, including cost cutting and edge computing (link). Although gains may come more gradually, the stock could grind higher on Enterprise Group growth and significant buyback activity."

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